Two years ago, Lidl established its own shipping company called Tailwind Shipping Lines through its foundation. Is this an unusual step for a retailer proving to be worth it?
Neckarsulm/Hamburg – The economic paths of the retailer Lidl sometimes stray from its core business. This is ensured with regular reliability by Dieter Schwarz – founder and chairman of the Schwarz Group. Currently, the publicity-shy billionaire is developing an artificial intelligence research and development center in Heilbronn through the Lidl parent company and the company’s own foundation. In addition, the Schwarz Group is investing in the promising German AI venture Aleph Alpha, which aims to establish itself as a European alternative to OpenAI.
With share acquisitions and financial injections for research and development, around 400 million euros are said to have flowed, according to Manager Magazin. The aim is to secure Germany’s digital sovereignty in this key technology, the company stated at the time.
Lidl invests in the sovereignty of its supply chains – and establishes its own shipping company
Sovereignty seems to be a kind of mantra for the Schwarz Group, especially Lidl. When the retailer’s supply chains were disrupted during the COVID-19 pandemic – as was the case for nearly all other retailers – and products were delayed along with the crucial seasonal business, the corporate leadership once again devised an autonomy plan. They hastily founded the container shipping company Tailwind Shipping Lines under the umbrella of the Schwarz Foundation in July 2022. This unusual step was met with a watchful eye within the industry – competitors saw Schwarz boldly stepping into a competitive sector marked by a few dominant players and high cost pressure.
However, what started as a response to the aftershocks of the COVID-19 pandemic has now become established. According to a report from Welt, the new subsidiary already has a fleet of nine freighters, including two own cargo ships and about 30,000 containers. Lidl is already transporting its own goods from Asian locations like Chattogram in Bangladesh and Colombo in Sri Lanka to Europe.
Tailwind Shipping Lines utilizes smaller ports in Europe and shorter transport routes
The company also now offers transport services for other businesses. Instead of the large ports in Amsterdam, Rotterdam, or Hamburg – where Tailwind, in true shipping company tradition, has its headquarters – the ships dock in smaller cities like Barcelona, Koper (Slovenia), or Moerdijk (Netherlands). The advantage lies in shorter transport routes, reduced waiting times for docking and faster clearances at target docks: “Our main goal is to meet the promised transport times. The shipping company uses sea routes with only a few stops,” explains managing director Christian Stangl to Welt. This results in an efficiency gain of about a week compared to larger shipping companies.
Response to Houthi rebels: Lidl controls prices, transport routes, and capacities
Particularly the transport costs, which can fluctuate dramatically due to geopolitical security conditions on the high seas, or those COVID-19 delivery bottlenecks, can thus be influenced independently. Recently, the strategy proved successful when the Houthi rebel group targeted Western merchant ships with missiles in the Red Sea and the Suez Canal. Global transport logistics found itself upended again, container prices surged above 10,000 US dollars, and deliveries were delayed.
However, unlike the competition, which primarily relies on large providers like Hapag-Lloyd, Maersk, or MSC, Lidl was able to coordinate its fleets and deliveries directly through its own channels with Tailwind. Following the Houthi attacks, the company quickly re-routed its ships along the South African coast at the Cape of Good Hope and adjusted the capacities to the respective target ports in Europe.
Not direct competition to major shipping companies – Lidl views Tailwind as a “premium provider”
“With […] additional ships chartered on short notice, we ensure that we and our customers have sufficient capacities available despite longer transit times,” stated a Lidl spokesperson to the industry portal HANSA. This guarantees a flexible reliability that customers of large shipping companies can only implement with difficulty, at least in the short term. According to Stangl, Lidl still relies on collaborations with industry giants for products that do not face seasonal sales pressure. This strategy is expected to remain in place for the time being – in press releases, the company presents itself as a premium provider in niche segments.
Despite Tailwind’s disproportionate growth: According to the industry service Linerlytica, the total capacity doubled to 40,000 standard containers by March – nearly double what it was in July 2023. Additionally, the Hamburg-based company has risen to 38th among the largest container shipping companies worldwide.
Drawback of environmental balance: Doubling CO2 emissions compared to larger providers
Tailwind faces criticism from environmental organizations. The shipping industry is already regarded as a climate sinner, accounting for an annual emission of around one billion tons of CO2. Yet, due to the higher loading capacity per transported container, larger shipping companies still have a better environmental balance than Tailwind. According to experts, the emitted CO2 is “twice as high” for Tailwind, as reported by the Welt. Moreover, the ships run on environmentally harmful heavy fuel oil, though Tailwind claims to use less polluting marine diesel in marine protected areas. According to company information, this reduces consumption by about 25 percent. Nevertheless, the weaker comparative balance against industry giants is expected to remain for the time being.
At least until Dieter Schwarz decides to increase capacities to match those of competitors like Hapag-Lloyd, Maersk, and others. Or until the company takes new paths again – for instance, by switching to environmentally friendly transportation methods.
